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Water companies prepare to bring forward infrastructure spend

Water companies are preparing to bring “hundreds of millions” of pounds worth of work forward to next year, according to a key industry figure.

Past ICE president Richard Coackley, who is also chairman of industry body the Water Cyclicality Report Implementation Group, told NCE that water companies wanted to get started early on large chunks of work currently slated for 2015 and beyond.

It follows a decision by regulator Ofwat to allow the companies to shift work between asset management periods (AMPs) where it helps smooth the workflow for contractors.

Coackley said: “We can’t be sure until water companies submit their draft plans for AMP6 in six weeks’ time. But the feedback we are getting is that it will be hundreds of millions of pounds of work brought forward.”

Water companies body British Water says that up to 40,000 jobs are lost every five years as investment dips at the end of each five year regulatory period.

Coackley said: “You lose talent and knowledge from the industry and this helps to increase inefficiencies. You are starting from scratch each period.”

Smoothing out the investment peaks and troughs would help contractors and could help keep down consumer bills, he said.

Work brought forward from AMP6 could be on site early next year, according to Coackley.

“Water companies will be able to start very quickly once Ofwat has noted their transition programmes,” he said. “Projects may start coming forward early in the New Year.”

A spokesman for suppliers trade body Water UK said the level of work to be brought forward had yet to be finalised. “Companies are definitely thinking about it as it will smooth investment over a period of years, which is good for the supply chain,” he said.

“One area water companies are keen to use this for is meeting the requirements of the Bathing Water Directive.”

Civil Engineering Contractors Association external affairs director Alasdair Reisner said civils firms would welcome the move.

“Our members have experienced the pain of boom and bust investment in the water sector,” he said. “It’s not good for us and it’s not good for clients or for customers. We think this move will drive significant efficiencies.”

The Water Cyclicality Report Implementation Group was formed in April 2013 to follow up recommendations in the Smoothing Investment Cycles in the Water Sector report, published in 2012 by Infrastructure UK and Ofwat.

NCE reported in September that many water companies had already started appointing delivery teams for AMP6 so they can hit the ground running when Ofwat signs off their spending programmes.

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